A phrase used to describe the awkward moment which ensues after someone you know to be a douche bag says or does something to embarrass themselves. Works best when said in a sort of melody with the "douche" staccato and the "chill" legato.

Girl 1: Sarah's been absent from school a lot lately.
Girl 2: I know! She's absent like ten days a week!
Girl 1: Douche chill...

First, I've been listening to Howard Stern for years, and have a large collection of tapes from the show. They've been using the term long, long before Arrested Development even came on the Air (November 2003 according to Wikipedia). As we speak I'm listening to the 11-19-2002 show (a full year before Arrested Development debuted), and Artie Lange is making fun of Eric the Midget's American Idol love by saying it gives him douche chills.

Basically, as it was used on the Stern show, it's when someone does or says something so douchy, it gives you chills.

The new guy at work came in and started telling me what to do. I would have told him off, but I was more surprised than anything. I'm not kidding, he gave me serious douche chills.